$4.85M Stagliano Infringement Suit Targets Mallcom Operator

May 21, 2013 3:30 PM PST

LOS ANGELES — A Jan. 21 trial date has been set for John Stagliano Inc.'s multimillion-dollar copyright infringement suit against the parent company of Mallcom.com and BlingBucks.com, which is said to have infringed on Evil Angel content by allowing complete downloads of its movies on PornStar.com.

John Stagliano Inc.'s  $4.85 million suit, filed at U.S. District Court in Los Angeles, alleges that PornStar.com without permission sold monthly memberships to consumers who were able to stream and download movies from Evil Angel's catalog of licensed content.  

Prior to the alleged infringing conduct, Direct Distributions Enterprises Inc. — the parent company of Mallcom.com, BlingBucks.com and PornStar.com — approached Stagliano execs and requested to license its movies for distribution through its VOD  section of  the Mallcom.com, according to court documents. 

Stagliano execs, however, declined the offer.

But in July 2009, the same execs discovered Direct Distributions had reproduced Evil Angel movies, placing them on PornStar.com under an "unlimited consumption" sales model.

The alleged infringement includes 19 Evil Angel films from directors Giacinto Fusco, Jon Rutkowski, Joseph Nassivera, Carlton Shurman, John Leslie Nuzzon and Michelle Kelly, as well as Gilbert Grosso’s Christoph Clark line,

Direct Distributions, however, contends in court documents that it had a Mallcom.com licensing deal with director Grosso.

But Grosso, who agreed to video-on-demand distribution via Mallcom.com, said in testimony that "he didn't contemplate and would not have accepted an invitation" to license his works through PornStar.com under an unlimited consumption model.   

Further, Stagliano attorney Gill Sperlein said that the contract entered into evidence has "irregularities" and that Grosso never agreed to unlimited consumption for subscribers.

"This model is extremely unattractive for premium brands such as Gilbert Grosso’s  Christopher  Clark line, because the producer would receive the same share of the  revenue as producers of discount brands, even though the consumers were likely only watching the premium brands," Sperlein said. "Grosso has never permitted the sale of his films in this manner, nor would he."

Sperlein, answering Direct Distributions' motion to dismiss in the case, offered an alternative.

 "It is plausible, perhaps even likely, that [Direct Distributions owner Jerry] Aharony intentionally deceived Mr. Grosso and then held the unilaterally executed agreement so that he could to attempt to enforce provisions of the agreement only if he later found it to be to his advantage (as he has now done) ... ," Sperlein said. "Only when Mr. Grosso filed this action against Direct Distributions Enterprises Inc. did Mr. Aharony attempt to revive the document and use it to his advantage."

Sperlein told XBIZ on Tuesday that he's focusing on a clue from a recent joint case management conference statement of where this case is headed.

Direct Distribution's counsel in the joint case management conference statement said: "As a threshold matter, plaintiff will have to establish ownership of valid copyright. Defendants contend that plaintiffs do not own elements of some or all of the asserted designs and that, therefore, plaintiffs’ copyrights are invalid and/or it lacks standing to assert infringement.  Even if plaintiff can establish ownership of some valid copyrights, it will also have to establish that the movies used were copied from plaintiffs’ works."

An attorney for Mallcom, Sean Macias, did not return XBIZ requests for comment by post time.

John Stagliano Inc.'s suit seeks statutory damages of $150,000 for each infringed work, plus $2 million for infringement of the Evil Angel trademark.   

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